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Will Mexico’s Free Zones affect Belize?

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Mexico’s President-elect Andres Manuel Lopez Obrador Mexican says in January of 2019 his government will transform its cities and towns along its border with the USA into free zones.  Then his focus will be on a similar measure with Chetumal, Quintana Roo. The economic impact of such a measure could be adverse to businesses within Belize’s Free Zone in the Corozal District. Tracy Taeger-Panton, the Minister of State Responsible for Investment, Trade and Commerce says it is still unclear what Mexico’s plans are but the Government is looking at ways to develop the economy of the northern districts.

Honorable Tracey Panton: “I am not sure how it affects us because there is very little that we know of this  proposal with the exception of what has been discussed publicly there would be a reduction in General Sales tax from what is now 16% to 8% and there was also mention that fuel prices will be adjusted. The Corozal Freezone as you know is a tax free zone completely and so there is no business tax or GST taxes. The items are duty free so until we have an opportunity to exam exactly what the intention is it’s hard to determine impact. I will say that the traditional business that have been operating in the zone which is primarily retail of clothing and alcohol and to some extent cigarettes is not going to be sustainable in the long term. We have recognized that for some time and we have gotten some technical assistance from the IDB and the technical team at the Ministry has been on the ground since March of this year looking at how we can improve the economic viability of the Corozal Freezone but also of the Corozal District as a whole and the northern districts which you know have very little economic activity outside of sugar. There is tourism which there is huge potential for.I had mentioned earlier this week that there is a new shrimp farm in operation in the north in Libertad which is the first one that had been opened. It is going very well and we believe if that is the kind of success that we expect it too that there will be more opportunities for shrimp farming in the North.

Minister Panton said there will be consultations on how to export professional services using the Free Zone as a hub of activity. Several sectors have been identified as areas for economic activity in the northern districts of Belize including:  agro processing, tourism, and the business process outsourcing sector commonly known as call centers.

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According to the plans of Mexico’s President Elect, Chetumal would also only be paying 8 percent Valued Added Tax which would be half the amount paid by other Mexican States. The Peoples United Party believes that the Commercial Free Zone at the Northern Border would be adversely impacted by the measure. Specifically, Leader of the Opposition John Briceno told Love News that not only does it threaten the viability of the Commercial Free Zone which is presently under great pressure due to increasing taxes, but the Belizean economy on a whole.

Leader of the Opposition John Bricenio: “The Freezone has shown the ability to create a lot of jobs for Belizean’s but there is no political direction, there is no political ownership of the Freezone so that whenever they have the problem especially with Mexico that the government then needs to step in as what we did to keep the Freezone going so that is one and then they put in to many political lackey’s. The infrastructure is breaking apart and we have to fix it if we want to be serious to develop that area. The issue of the moral that the Freezone is just cigarettes and liquor and in some cases allegations of money laundering. The Freezone provides presently jobs for about 1000 Belizean’s and we need to make sure that we can protect that as best as we can. I hear the Deputy Minister of Economic Development talking about doing more studies and more studies. We have too many studies, we know what we have to do. We have to rethink, we have to relook at what is happening at the Freezone. We should be in consultation with the investors at Freezone, we should be in consultations with people in the North concerning the Freezone and also we need to be meeting with the Mexican government to ensure that we can protect the Freezone so that it can grow. Secondly we also need to be able to rethink what we can do, right now is strictly retail, call centers can come in, we can try to attract light manufacturing in the areas so that we can export into Mexico and into Central America and the Caribbean but we need to think what incentives are we going to get these investors to go in and the last point I want to make is that is why it is so important, we have to meet with Mexico and negotiate a partial scope agreement so that our goods can move easily into Mexico and so that we can attract Mexicans to come into Belize not only to invest but to visit Belize and that they can spend their tourist dollars in Belize.”

Mexico’s plans for Chetumal, Quintana Roo would come into effect in January, 2019.

 

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